Brett:

Really fast, and by the way, you can learn more about MikeWaters QuestCrypto.com, that’s questcrypto.com. You have the person, the sellers got his cash, he’s gone. You own the property, using the token these tokens, and then at that point, perhaps you can sell those tokens to other investors, maybe get some of your cashback or diversify it, maybe I printed that out. If I property’s worth a million bucks, but it’s all in tokens, or a million tokens, however, you want to define that? Can I turn around and start selling small pieces of it?

Mike:

That’s the idea. For a really simple example, is, let’s say, a million-dollar property and you had a $500,000 mortgage, what we would do is we’d create $1,000,001 tokens, we make a contract with you that we’re not going to release any money until the mortgage is released to zero, then we go out and we sell all 1 million tokens. Now, if you only want us to sell 500,000 tokens and keep the rest, that would be fine. We would sell the 500,000 tokens, reduce your mortgage to zero, and then the other tokens you can keep in your wallet, or you can sell them later if you want if your house is gonna go up in value. Good either way, by the tokenization of the property on the quest system, you’re 100% liquid with crypto instantly on your property.

Brett:

Maybe you can give me a real-life example of like a deal you’ve done or maybe a student of yours, like you kind of break down like what were the numbers? What were the reasons what went well, what were some of the surprises?

Mike:

I’ll give you a real-life example of the home right here in Salt Lake City. I’m going to run the numbers up just so you can keep it real around so we don’t have these long. Numbers basically have a $500,000 house with a $240,000 mortgage on the house, and the $240,000 mortgage had a 15 $180 payment, and that 15 $180 payment covered principal interest, taxes, and insurance. Then what we did is we tokenized, the $500,000 $500,001 tokens, and then the tokens were sold, and now the home’s equity is divided into $500,001. chunks, then the homeowner got the $500,000 minus the $240,000 mortgage in crypto. They got 266,000 ish dollars in USDC, and then they just use the exit ramp up their choice to, get the cash-out. The important thing to understand is the way quest works is we attach the token to property rights, not to the property, and that’s the important thing to understand is so for example, these people that own the donor tokens on this property, they don’t have the right to knock on the door and sleep on the couch, they can’t trust pass the house, they can’t do anything, because they just don’t the equity, rights of equity, not rights of occupancy. Now the homeowner no longer has a 1500 $80 payment. All are responsible now for is their taxes, their insurance, and maintaining the property. Their expenses dropped by about 58% on the property. The pretty dramatic drop in their expenses. But if they go to sell their property today, they’re going to get nothing on the HUD-1 it’s going to show zero.

Brett:

I’m going to try to unravel it a little bit because it’s even less now. It’s definitely new. So tokens are attached to the property rights. In other words, the way, I’m thinking of it is kind of like a lender. If you owe money to somebody upon the sale of the asset, and you owe all of them all of the equity, imagine at 100% financing. You gotta pay or the value of your house dropped and you have no equity, you’re gonna pay the loan back and you walk away with zero. It’s sort of like perhaps, doing more financing, and one way to think about it. However, the token people do not have the right to occupy, they can’t come in and live there. In the meantime, you pay property insurance, you pay taxes, the homeowner. You pay the standard. It’s almost like maybe between ownership and renting Is that a fair summary?

Mike:

It’s better because you still have your name stays on the title. The homeowner’s name stays on the title, they’re the legally occupied occupant legally authorized document was the word I was looking for. They have all the rights that go along with property, they can keep in mind, they’re no mortgage now. They can rent the property out. They don’t have to give that to the token owners. They can leave for a short term, they can make an Airbnb, they can do anything they can do as a homeowner, it’s just if they sell the equity has already been sold, fast.

Brett:

Say that’s it. It’s better than renting because you have so much more of the rights, right to sleep ownership,

Mike:

complete ownership. Now, you deal with this capital gains issue. So I’ll just say a few things without saying them. If you have equity in a home, and even if you haven’t paid off, and you turn all of your equity 100% into tokens, and even if you own 100% of those tokens in your wallet at the title company when you sell the house, it’s going to show up as zero.

Brett:

Fascinating.

Mike:

What happens is the title company then sends the money not to you because the equity was sold. the title company sends the check to the crypto company and says, here’s a payoff of the equity that you were attached to on the property. The crypto company then notifies every token owner, your tokens are now worth $1 blood whatever, and here’s the USDC equivalent because the collateral is no longer in existence.

Brett:

I’d have to see like some arrows and some boxes and stuff but yes, but I’m digging because the Same thing with the Deferred Sales Trust right there’s to get lender funds as an owner you got to lend them to the trust and exchange for the promise of the trust to pay back over time and you got to have the buyer, cash ready to go or, he can get a lender to but he got to put it there and it’s you got to kind of sit in the box to kind of get it. But I imagine it’s like anything, Mike. It’s like riding a bike. The first time you ride this thing. It’s wobbly. Maybe I’m falling off a little bit. But as you’re doing these deals, and you’re seeing it right, it becomes more seamless. Is that a fair summary?

Mike:

It does, and I can already tell that I can tell by looking at you that the wheels are turning, and that’s exactly what they’re supposed to do. Because when you understand that, you can basically take 100% of the equity and lock it up into essentially what would be considered by the title Money and the IRS anyone else’s debt. You have always a zero on the HUD-1. I’m with you, and so with 091, and then token value, you can deal with what you want. You can trade the token for Bitcoin, you can trade it for cash, you can do whatever you want, and because it’s blockchain, there’s no real way to find out who owns it.

Brett:

Got it. Now, a couple of questions A, will a bank allow a loan for a property that’s secured with these tokens, like in other words, I have, like a deal I listening to right now, and they won’t even allow a seller to carry back paper after the first.

Mike:

Here’s what it is. What we don’t use is a lending instrument, we don’t use actually a note and trustee, what we use is equivalent to taxing authority, and this is actually, there’s only one way to do it in us the way we’re describing it, and we’ve actually patented that process. But we actually have taxation authority. What we do attaches to the land as a permanent, as a permanent cloud on the title. If you can find a lender to lend on it, the lender understands that that cloud on the title is in a supreme first position, meaning may never be ahead of them. You probably won’t get a loan on the property.

Brett:

Got it? All right.

Mike:

The lender that will do it, and might regret it, because if you default, they can do nothing.

Brett:

Kind of, what’s the real-life scenario? I have clients, and they have, a lot of games and a lot of equity in crypto, and they’re like, I want to want to go buy a house, they call up, you again, they find you at QuestCrypto.com, and like, Mike, I want to buy the house in Utah and California, different state, whatever, rental house primary home doesn’t matter. But I want to, I want to transfer this crypto into these tokens, which I can get with you, Mike. Then go use that to buy this house is am I following this?

Mike:

That’s one of the best scenarios for this product. I mean, what we described earlier was great, taking your equity and locking it up. But see that I’m seeing a lot of articles right now, people are buying houses with Bitcoin, and that’s a very disingenuous thing that they’re saying, because they didn’t actually buy the house with Bitcoin, what they did was they sold their Bitcoin use the money to buy a house, and the taxing entities are going to catch up with them. Because if they paid like, I know, a guy that paid like, he had $10,000 worth of Bitcoin, and now he’s sitting on top of like, $18 million worth of Bitcoin, if he sells that Bitcoin to buy a house, what he’s going to be stuck with is a capital gains tax on the difference between the $18 million and the 10,000 pay, it’s going to be a capital gain, he’s not going to get out of it, he’s done with it, and then he just bought real estate with it, which is now going to be subject to capital gains.

By doing that, they expose themselves to double taxation. I know you know exactly what I’m talking about. Whereas, if somebody wanted to buy a house with crypto, they would come to us, they would say that’s the house like want to buy, we would tokenize the escrow, they would then take their crypto trade it for our crypto, which is a like for like exchange. They’ve been taken make a life for like exchange fun to the escrow, we would then close the escrow agreement with the title company and send them a check, we would cast USDC to send the title company a check, we would give the title company the documentation to record a title, and then you would now be in your home.

Brett:

Got it? So I think it says kind of like perhaps 1031 in crypto to real estate.

Mike:

It’s exactly like that. That’s one of the things that we modeled was a 1031 exchange, how does it work? How could you do that in crypto? That’s where one of the ideas of our product came around?

Brett:

Essentially, this house is in USD or it wasn’t USD. But now we basically have transferred that to this to a token. And then and all the rights and all the things that are associated there, and then you’re just trading, your crypto for these tokens, which means your trading which these tokens own that house. Individual token, Mike, or is it only for that particular house?

Mike:

What it would be is you buy the quest token, which is our stable $1 coin. It’s worth $1. Today, it’s worth $1 10,000 years from now. Got it, and then you take that so the guy would take, let’s say, a $5 million house, he would take 5 million in Bitcoin and buy 5 million of our stable coins. At that point, we do the trade immediately, and now we have the 5 million in cash. We now know that if he goes and buys a $5 million house, we have the cash to cover it, because it’s that volatility that can destroy this right. Again, he takes it Bitcoin cash isn’t in for 5 million quests, we immediately sell it, and now we have 5 million USDC in our account, then that we create a quest dash Bob’s house token.

It’d be quest dash a serial number, then that serial number creates the tokens that he can then spend those quest tokens on, that are attached specifically to that house, and that house is in, we have a database that looks just like a real estate, MLS beds, baths, pictures of a house, everything, including appraisals, etc, that are visible to anybody that wants to buy the token, they can, in fact, click inside the token information, there will be a hyperlink that will bring up the appraisal that will bring up all the things on the property, and they can say, what token am I buying, I’m buying a token in that house right there, and they would be able to look at the house, they will be able to see when it was last appraised how it was bought at $1, and it’s currently trading at $1.30. Because the property’s gone up 30% in value since it was tokenized. Everything they need.

Brett:

That is really interesting, really fascinating, and feels like it’s the future for like, that movie Tron right when you’re like, taking me down like these, like these, these streets that are leading to like the city that’s in the future. That’s it’s pretty incredible. Mike, I’m curious how many of these transactions have been closed? Then to how many escrow people, I imagine their heads explode. Because they’re so used to doing the old old way of doing things. Well, how are you? How are you educating or empowering some escrow people to actually cooperate?

Mike:

Actually, that’s a series of questions. One, the first thing I’ll say is, when we built the system, I have bought and sold over 200, real estate transactions in my life, commercial, residential, multifamily, single-family. I know how the real estate world works. Our CEO, he’s an attorney, and he’s also heavily delved into your real estate and property rights. When we designed the system. We said we’ve got to make it so it overlays right on top of existing systems. Right now, I’m going to say unless they’re completely like, want to fight with us, title, companies will find very little difference in dealing with us versus a mortgage company. All we’re going to tell them as we request crypto we’re doing crypto loans is what we tell them because that’s all they need to know, and where do you want us to wire the money, and then the documents that you’re going to record are these and they’re not like anything you’ve ever seen. But here are the instructions on how to record them.

Brett:

There’s tons of overlap here, Mike. Like, literally, like with the Deferred Sales Trust, it’s still very, very, I mean, in our circles, it’s well known but most of the commercial real estate world, we did like a primary home sale in Palo Alto and was the Old Republic, she’s been in for 30 years, and she had never seen it, and her mind was exploding. We’re gonna hit these targets x rays, like 1000s of closes billions under management, as they walk through every step of the way, and just, it’s kind of like that in the here’s the form. Here’s the thing, the box, here’s how to report it. It’s just an installment sale. You’ve done installment sales. I have, but we’re just using a trust, but it’s still outside the box, you’ve got to kind of hold there, and by the way, I will mention that the Deferred Sales Trust can defer capital gains tax right on the sale of real estate, you can save a failed 1031 Exchange. It can defer capital gains tax on the sale of cryptocurrency. In fact, the first one we just, I caught breaking the four-minute mile, Mike, because for the longest time that Deferred Sales Trust only had been done for public stock, private stock, artwork, collectibles, real estate, businesses, primary homes, and then about 60 days ago.

We did the first Bitcoin Ethereum case, the couple, Silicon Valley bought it for about 100,000, it went up to 13 million, there the value of their coins, and they were able to sell a big chunk of that and defer the capital gains tax, and the cool thing is once the funds are there, you can’t do a primary home which sounds like your stuff is an advantage there. But you can do investment property, you can partner with the trust and you can buy an investment property and get the depreciation at the appreciation opportunity, and then you could also diversify it into cryptocurrency into stocks, bonds, and mutual funds into a new business venture into hard money lending. I had a client who sold a $2.6 million business in Alabama and he’s building 70 multifamily units in Tennessee, all tax-deferred with the trust so very flexible, but for those who haven’t done, it can be can kind of be overwhelming. What are some ways that you’ve tried to simplify this for those who are being educated with this?

Mike:

Well, it requires a little you have to kind of unscrew your brain and then put in a new, a whole new thought process on this and we are very similar. After this call, I recommend us hooking up because we could definitely talk about some of our larger clients that we deal with Because there are places where we can help them and you can, and there’s places one of the things that our the quest crypto allows you to do is, is let’s say you had a property with $10 million you could effectively if you had $10,000,001 us coins from your own property, you could effectively buy $1 and 10 million different properties you can create a digital REIT if you wanted out of your property and you can collateralize that REIT you can put all those tokens into a box and then you can collateralize the box and create your own mortgage-backed security. We’ve got some really cool tools I don’t really talk about to the average gamer because they’re not you don’t understand how the game is played.

Brett:

Thank you all thank you, appreciate yesterday, Marcus & Millichap commercial real estate broker by trade grew up in the real estate business, my dad, custom homes, rentals, room additions all my life, fell in love with commercial real estate, and then learn the hard way with with the 2008 crash, that clients have an old blockbuster way of doing things which is 1031, sell high and buy higher 180 days later, and we’re like this is got to be something different so I can kind of relationship with your gift in the beginning what you said. Like unconventional thinking, like there’s got to be a better way like or maybe there’s a better way let’s try it out, and that wasn’t the Deferred Sales Trust and fast forward. It’s to us it’s the Netflix way of doing things. But he does take some time to understand it. By the way, I do want to ask you just about that real quick, the biggest frustration with capital gains tax when it comes to selling cryptocurrency. What do you find in the crypto world is the biggest frustration when it comes to options or lack thereof?

Mike:

Well, first of all, it’s education. You got a lot of 20-year-old multimillionaires running around, okay? And they’re like, I’m just selling my crypto and buying my mas variety or my, and I’m like, dude, stop what you’re doing right now. Stop, you need to stop the party because what you’re doing, it’s gonna catch up with you. The IRS is gonna come in, they’re gonna get you off your basis points, and then and then the party’s gonna come crashing down, and it’s because they’re young kids, they think so much that they’re doing things so differently than the way their parents do. They think they’ve hacked the system and they have in a wide variety of ways but the problem is when you go from that digital world to the real world. Have this, put the brakes on, and do it right so that’s the number one frustration I’m having is people with large amounts of Bitcoin understanding that yes, they have money but they have a problem that they don’t even realize get them to do that.

That’s the number one problem the number two problem is getting them to like the crypto community is all about sticking it to the man I got money I did this and I don’t have to deal with the man right the man is government or whoever right so it’s strong libertarian circles, and the second problem there is getting people to understand that you have a partner and he’s called the government and you have to do some homage to the man or the man will get you so it’s like those two little thought processes. Yes, you’ve hacked the system but no you haven’t and then you’re still going to have to do business with the man you have to get those people to be aware of that then we can have an intelligent discussion about what to do about it.

Brett:

I think that’s so thoughtful and so timely right and there are so many folks before they meet us are talking with you Mike that that feels like they’re trapped between a rock and a hard place right and there are many that actually want to report properly and sell properly if they didn’t feel like the tax was so high. This is where I highly encourage you to get with Mike to get with me to look at your options. I don’t know Mike, if you charge anything, I don’t charge anything to talk about. I don’t need to shatter Jeez. We want to just give you the options, and then the neat part of the Deferred Sales Trust Mike and I’m curious on your thoughts on this is we literally tell the IRS, we bought it for X, we sold it for Y but we haven’t taken any constructive receipt. In fact, we’re in a deferral place that’s why we’re kind of like an IRA kind of like a 401k and it’s sitting there and it’s earning interest and it’s slowly paying us back and we’ll pay tax on the interest on ordinary income.

Then we can partner with and go do other deals. But what I like to say is, it was a cool video by Grant Cardone he just made the other day about, making sure you’re buying the adequate amount of real estate to get the depreciation to offset your income, and when most people that are making a lot of wealth very quickly, they’re going to buy all these things and they’re in the highest possible tax bracket because they don’t have the depreciation to offset it, and it’s like building a house on the sand right where it’s gonna catch up with you. The man, the government. As incompetent as they are with our tax dollars. They are going to come to find you and you don’t want to be in that situation where you don’t have a proper tax plan and you haven’t paid taxes on these things. All that being said, the Deferred Sales Trust, we say, sell, you’re actually literally reporting it.

I bought it. For a million it’s worth $20 million right and here it is but I’m taking back in on an installment sale and I’m paying taxes slowly along the way and by the way the government likes that because it stimulates the economy the funds are invested in real estate projects are invested in the stock market that can be invested into your own business startup creates more jobs and more tax revenue so you gotta we gotta you want to find a way to make it a win-win for everybody you don’t want to hide you don’t want to just be off the radar you literally say no here I am and let’s play by the rules and let’s use the legal framework of the tax code to create and preserve wealth and deferred tax any thoughts on that Mike?

Mike:

I couldn’t agree more that’s exactly what the message I’m trying to tell people is yes you got a lot of money you’re gonna hack the system now you can’t have to pay

Brett:

By the way, you can learn more about Mike Waters at QuestCrypto.com that’s questcrypto.com. You can learn more about the Deferred Sales Trust and what we’re doing at CapitalGainsTaxSolutions.com that’s CapitalGainsTaxSolutions.com I also invite Mike and anyone else listening to this to our free mastermind every Friday at 10 am Pacific Standard Time 1 pm eastern time or on a zoom call and it’s called basically cryptocurrency DST mastermind we’re talking all things cryptocurrency all things Deferred Sales Trust and we’re coming together to try to simplify all of these types of scenarios and you can come on as your questions and learn more again you go to CapitalGainsTaxSolutions.com to register for free that being said Mike is running out of time. Are you ready for the lightning round?

Mike:

Go for it.

Brett:

All right. Knowing what you know now if you can go back to your 25-year-old self what’s the one Golden Nugget Make sure to tell yourself to do?

Mike:

Never ever sell.

Brett:

Real estate or crypto or what all of it?

Mike:

Your real estate, do not sell, find a way to hold it.

Brett:

Second question. What’s the number one book you’ve recommended or gifted the most in the past year?

Mike:

I’m gonna say that one oh man it left my brain I’ve got it right here hold on he’s gonna love it, it’s a Sell Like Crazy: How to Get As Many Clients, Customers and Sales As You Can Possibly Handle by Sabri Suby

Brett:

Third question what’s the number one leadership quote or theme that you strive to live by?

Mike:

My fame is when you help everybody when there’s nobody that can hate you, and yeah, you can get rich doing that. If you can find a way to make everybody loves the deal then there’s nobody that hates you and everybody loves you.

Brett:

Next question. What do you most curious about right now?

Mike:

I’m most curious about where the government’s headed with crypto what they’re gonna do about it because they can’t stop it.

Brett:

Me too. Last question after all your success all your knowledge in real estate the over 200 transactions connecting the crypto world creating an amazing thing at quest capital on quest crypto calm although that would be kind of a cool name to quest capital crypto.com but quest crypto.com How do you stay centered in your values Mike and how do you stay encouraged to charge forward to reach new heights?

Mike:

I always say part of my values in our concept is people should be able to use their equity as money in their wallets to spend in the world I’m my values are very much rooted in our founding father’s beliefs that your title was your standing and ability to operate in inside the system. I stay focused on core fundamental all-American principles about morality and just being a God-fearing honest person.

Brett:

Fantastic. couldn’t agree with you more? Would you remind our listeners one last time, what’s the best place to find you?

Mike:

Well, you can email me directly at Mike at quest crypto. I so far, haven’t regretted that I do get a lot of emails. But nobody has sent me anything weird yet. I won’t change that today. Email me there if you have questions if you have ideas because there’s a lot of things that we’re doing, including we’re financing an $8 billion casino project in Las Vegas right now using cryptocurrency, and there’s a lot of ways for people to get involved, and essentially, we built the model so that anyone with $1 in their pocket can be an investor in real estate using our system. It’s pretty cool.

Brett:

It’s really cool, Mike, I want to thank you for being on the show. I want to thank you for thinking unconventionally as a youngster even right now. Right kind of challenging the status quo and figuring out ways to unlock ways to create and preserve our wealth with crypto with real estate and giving people more freedom. I think that’s an amazing thing that you’re doing, I would encourage you to keep doing it, and also want to thank our listeners for listening to another episode of the Capital Gains Tax Solutions Podcast, also stream on eXpert CRE Secrets Podcast, where we believe most high net worth individuals and those who help them they struggle with clarifying their capital gains tax-free options, not having a clear plan is the enemy, and using a proven tax deferral strategy such as the Deferred Sales Trust is the best way for you to sell highly appreciate it businesses real estate cryptocurrency and are getting with Mike Waters. Instead of selling that crypto, trading it transferring it into these tokens in buying real estate. Really cool. Make sure you check him out. By the way, one last reminder as well, mastermind every 10 am PST in order for you to get comfortable with what we’re talking about. It takes time and energy and input right everyone comes together and figures out a better way to do it. asking good questions, challenging. All of the things that we’re talking about, we’d love to have you come at 10 am PST, go to CapitalGainsTaxSolutions.com to register right now. invite a friend, invite a crypto friend, invite a real estate friend, a financial adviser, friend, and we’re going to connect there. Thanks so much for watching and hearing this and if you’re listening on iTunes.